dm200 wrote:The decision of an adult child to intervene, advise, interfere with, etc. a parent's financial decisions and choices can often be very difficult. On the one hand, the parent should be able to make the choices he/she wants. On the other hand, scams, elder abuse and failing faculties enter in. A few years ago, my father "lent" significant sums to an acquaintance over a period of several years. Eventually, especially as my father started to slip a bit, my brother became aware of this and intervened. Due to my brother's persistence, it turned out ok. In this process, though, it was discovered that this acquaintance and the money was involved with a relative of his who was a known crook.

bold added

How does this apply (also mentioned by another poster).

She is in her 50s, not 80's or 90's.

My parents are in their early 60s and as their 32 year old son I am completely involved in their finances. Within the last year I found out that when my dad was still working he put 500k in variable annuities and 200k in closed REIT funds. Both of these "investments" have lost substantial value. My dad also loaned his older brother around 10k maybe 10 years ago. His brother died, and his wife has said she cannot afford to repay the loan.

These were all missteps due to my parents lack of money knowledge. I do not critique their day to day spending or anything similar, but my mom knows that if there is a big purchase or something she wants to change, she talks to me first.

AllySK wrote:The most she wants to do is allow me to draft an agreement and ask them sign it.

If the term is for one year, then the lenders are confident about the market and paying your mom back. I would draft a promissory note and act as the go-between your mom and her friend, that way your mom would not seem to be worried about lending the money and you are the son looking out for your mom's interest. Also, one interesting point is how did they come up with $340K if the banks couldn't assess that high of value on the property.

I agree with this advise. At the very least, I would have them sign a promissory note something like this:A Sample Promissory note__________________ ___________________________ _______________City State Date

(Borrower) agrees and promises to pay to (Lender) the sum of ($ ) Dollars for value received, with interest at the annual rate of % payable after (Date) If this note is in default and is placed for collection, (Borrower) shall pay all reasonable costs of collection and attorneys’ fees.____________________________ Permanent address _________________________________(Borrower’s signature) (Date)____________________________ Permanent address_________________________________(Lender’s signature) (Date)_________________________________(Signature of the Witness)

This is just a simple promissory note form I found online that you might use or something similar. Your mom would not have a lien on the property with just the note only, but it's better than nothing. If borrower defaults, she could at least sue them and get a judgement. Again, I am not a lawyer.

Bold added: pay after date seems open ended. I would think pay by date would be desired.

I agree. As I said, this is just a simple note form I found online. The lender can certainly make changes to it such as: take out "payable after (date)" and insert "payable on or before (date)". Also, I don't think it is necessary to have a witness sign although it wouldn't hurt anything either. And it is not necessary to have the note notarized because it will not be recorded, but again I don't think it would hurt anything if it is notarized.

dm200 wrote:The decision of an adult child to intervene, advise, interfere with, etc. a parent's financial decisions and choices can often be very difficult. On the one hand, the parent should be able to make the choices he/she wants. On the other hand, scams, elder abuse and failing faculties enter in. A few years ago, my father "lent" significant sums to an acquaintance over a period of several years. Eventually, especially as my father started to slip a bit, my brother became aware of this and intervened. Due to my brother's persistence, it turned out ok. In this process, though, it was discovered that this acquaintance and the money was involved with a relative of his who was a known crook.

bold added

How does this apply (also mentioned by another poster).

She is in her 50s, not 80's or 90's.

My parents are in their early 60s and as their 32 year old son I am completely involved in their finances. Within the last year I found out that when my dad was still working he put 500k in variable annuities and 200k in closed REIT funds. Both of these "investments" have lost substantial value. My dad also loaned his older brother around 10k maybe 10 years ago. His brother died, and his wife has said she cannot afford to repay the loan.

These were all missteps due to my parents lack of money knowledge. I do not critique their day to day spending or anything similar, but my mom knows that if there is a big purchase or something she wants to change, she talks to me first.

Bold added: plain old ignorance and lifelong lack of common sense is a totally a different issue than declining mental ability due to aging.

We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

WHL wrote:...My parents are in their early 60s and as their 32 year old son I am completely involved in their finances. .. My dad also loaned his older brother around 10k maybe 10 years ago. His brother died... These were all missteps due to my parents lack of money knowledge. I do not critique their day to day spending or anything similar, but my mom knows that if there is a big purchase or something she wants to change, she talks to me first.

Good to hear that your financial oversight of your parents doesn't (yet) extend to the level of critiquing day to day spending but this still strikes me as at best an unusual arrangmement if your parents are compos mentos as would be expected of early 60s. I loaned my sister and then brother-in-law around 10K over a decade ago that, thanks to a messy divorce, I'm not going to get back - but I don't consider that's ever going to be any business of my children, nor do I consider it a misstep per se: it was not due to a lack of money knowledge, it was just a family thing. And in the noise overall.

Rodc wrote:Bold added: plain old ignorance and lifelong lack of common sense is a totally a different issue than declining mental ability due to aging.

Sorry if this seems like a slam on my elders, but from my personal experiences, the vast majority of past generations have no idea how to handle and invest their money. The dependance on pensions and social security was so high and guaranteed that no one needed to learn about investing. Previous generations were also much more trusting of others and weren't / aren't used to so many people trying to take advantage of them. If you want to call this a lack of common sense, be my guest, but that's a pretty unrealistic view IMHO.

Case in point: dad had two great pensions. When he retired, his FA directed him to roll the entire amount into variable annuities. Sure, my dad could have done a lot more homework, but he trusted this guy - look what it got him.

freebeer wrote:Good to hear that your financial oversight of your parents doesn't (yet) extend to the level of critiquing day to day spending but this still strikes me as at best an unusual arrangmement if your parents are compos mentos as would be expected of early 60s. I loaned my sister and then brother-in-law around 10K over a decade ago that, thanks to a messy divorce, I'm not going to get back - but I don't consider that's ever going to be any business of my children, nor do I consider it a misstep per se: it was not due to a lack of money knowledge, it was just a family thing. And in the noise overall.

I don't see it as unusual at all. I'm glad they are open minded enough to let me help them with things that they have neither the time nor the inclination to learn at a point in their lives when they should be relaxing, not worrying.

freebeer wrote:Good to hear that your financial oversight of your parents doesn't (yet) extend to the level of critiquing day to day spending but this still strikes me as at best an unusual arrangmement if your parents are compos mentos as would be expected of early 60s. I loaned my sister and then brother-in-law around 10K over a decade ago that, thanks to a messy divorce, I'm not going to get back - but I don't consider that's ever going to be any business of my children, nor do I consider it a misstep per se: it was not due to a lack of money knowledge, it was just a family thing. And in the noise overall.

I don't see it as unusual at all. I'm glad they are open minded enough to let me help them with things that they have neither the time nor the inclination to learn at a point in their lives when they should be relaxing, not worrying.

I will continue to learn until I can't. And if I didn't understand my finances I would be worrying, not relaxing.

"Some men worship rank, some worship heroes, some worship power, some worship God, and over these ideals they dispute and cannot unite, but they all worship money. - Mark Twain

BolderBoy wrote:A blanket over his head and a baseball bat broke dozens of his bones. When the investigators came, no one had seen or heard anything. Due to the Vnam War sizzling along, they couldn't hold up our being sent to our further training stations and I never heard more about it."

That's quite a story. I'm curious what your thoughts were then about it and whether that's changed in the last 50 years.

Yeh, I can't be the only person who thinks potential murder is not the appropriate response to fraud.

I'm fairly certain that your mother is not seeing it in terms of potential financial loss. In fact, she would almost certainly tell you that this friend's friendship is worth well more than the $40k she is lending to her, and that she would be 100% ok if for whatever reason, it ended up becoming a near-total loss.

BolderBoy wrote:A blanket over his head and a baseball bat broke dozens of his bones. When the investigators came, no one had seen or heard anything. Due to the Vnam War sizzling along, they couldn't hold up our being sent to our further training stations and I never heard more about it."

That's quite a story. I'm curious what your thoughts were then about it and whether that's changed in the last 50 years.

Yeh, I can't be the only person who thinks potential murder is not the appropriate response to fraud.

I can't be the only one thinking that an appropriate response is NOT to just let the guy deploy and never see him again.

Rodc wrote:Bold added: plain old ignorance and lifelong lack of common sense is a totally a different issue than declining mental ability due to aging.

Sorry if this seems like a slam on my elders, but from my personal experiences, the vast majority of past generations have no idea how to handle and invest their money. The dependance on pensions and social security was so high and guaranteed that no one needed to learn about investing. Previous generations were also much more trusting of others and weren't / aren't used to so many people trying to take advantage of them. If you want to call this a lack of common sense, be my guest, but that's a pretty unrealistic view IMHO.

Case in point: dad had two great pensions. When he retired, his FA directed him to roll the entire amount into variable annuities. Sure, my dad could have done a lot more homework, but he trusted this guy - look what it got him.

That is still not an issue of a decline due to age.

I suspect you greatly overestimate the wisdom of your generation and the lack thereof in older generations. Just a turn around of the also incorrect often heard, "This modern generation is no good (does not understand the value of a dollar, stupid, immoral, lazy, etc) that the elderly have been saying since the time of the ancient Greeks (likely longer if we could find more intact writings).

We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

Rodc wrote:Bold added: plain old ignorance and lifelong lack of common sense is a totally a different issue than declining mental ability due to aging.

Sorry if this seems like a slam on my elders, but from my personal experiences, the vast majority of past generations have no idea how to handle and invest their money. The dependance on pensions and social security was so high and guaranteed that no one needed to learn about investing. Previous generations were also much more trusting of others and weren't / aren't used to so many people trying to take advantage of them. If you want to call this a lack of common sense, be my guest, but that's a pretty unrealistic view IMHO.

Case in point: dad had two great pensions. When he retired, his FA directed him to roll the entire amount into variable annuities. Sure, my dad could have done a lot more homework, but he trusted this guy - look what it got him.

That is still not an issue of a decline due to age.

I suspect you greatly overestimate the wisdom of your generation and the lack thereof in older generations. Just a turn around of the also incorrect often heard, "This modern generation is no good (does not understand the value of a dollar, stupid, immoral, lazy, etc) that the elderly have been saying since the time of the ancient Greeks (likely longer if we could find more intact writings).

+1

People knew how to handle their money; retirees knew how to buy CD's and how to be frugal. However, prior to about the 70's, the average person did not own (or expect to own) equities. You had to be rich to invest in the market and you had to have a broker. Discount brokerages did not exist, the internet did not exist and the wealth of information we have today did not exist.